THIRD DIVISION

BENGUET CORPORATION,

DENNIS R. BELMONTE, EFREN C. REYES and GREGORIO A. FIDER,

Petitioners,

- versus -

CESAR CABILDO,

Respondent.

G.R. No. 151402

Present:

YNARES-SANTIAGO, J.,

Chairperson,

AUSTRIA-MARTINEZ,

CHICO-NAZARIO,

NACHURA, and
REYES, JJ.

Promulgated:

August 22, 2008

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

This is a petition for review on certiorari assailing the Court of Appeals (CA)
decision[1] in CA-G.R. CV No. 37123 which affirmed with modification the
decision[2] of the Regional Trial Court (RTC), Branch 6, Baguio City in Civil Case
No. 593-R.

Petitioner Benguet Corporation is a mining company with three (3) mining

sites: Balatoc, Antamok and Acupan. Petitioners Dennis R. Belmonte,[3] Efren C.
Reyes,[4] and Gregorio A. Fider[5] are all officers and employees of Benguet
Corporation.[6] On the other hand, respondent Cesar Cabildo and Rolando Velasco,
defendant before the lower courts, were former employees of Benguet Corporation.

At the time of his retirement on August 31, 1981, Cabildo was Department Manager
of Benguet Corporation’s Transportation and Heavy Equipment Department and had
worked there for twenty-five (25) years. Thereafter, Cabildo became a service
contractor of painting jobs.

Sometime in February 1983, Cabildo submitted his quotation and bid for the painting
of Benguet Corporation’s Mill Buildings and Bunkhouses located at Balatoc mining
site. He then negotiated with petitioners Reyes and Fider, the recommending approval
and approving authority, respectively, of Benguet Corporation, on the scope of work
for the Balatoc site painting job which included necessary repairs. Reyes and Cabildo
discussed the price schedule, and the parties eventually agreed that Benguet
Corporation would provide the needed materials for the project.

Upon approval of his quotation and bid, Cabildo forthwith wrote Reyes on March 5,
1983 requesting the needed materials, so that he could immediately commence work.
On March 7, 1983, even without a written contract, Cabildo began painting the Mill
Buildings at Balatoc.

On March 9, 1983, Cabildo again wrote Reyes requesting the assignment of a

representative by Benguet Corporation to closely monitor the daily work
accomplishments of Cabildo and his workers. According to Cabildo, the request was
made in order to: (1) preclude doubts on claims of payment; (2) ensure that
accomplishment of the job is compliant with Benguet Corporation’s standards; and (3)
guarantee availability of the required materials to prevent slowdown and/or stoppage
of work.

On even date, Cabildo submitted his first work accomplishment covering carpentry
work and installation of the scaffolding for which he received a partial payment of
P10,776.94.

Subsequently, on March 23, 1983, Cabildo and Benguet Corporation, represented by

petitioner Belmonte, formally signed the Contract of Work for the painting of the Mill
Buildings and Bunkhouses at the Balatoc mining site including the necessary repair
works thereon. The Contract of Work, in pertinent part, reads:

(1) [Cabildo] shall paint the Mill Buildings at Balatoc Mill and all the
bunkhouses at Balatoc, Itogon, Benguet, including certain repair works which may be
necessary.
 (2) For and in consideration of the work to be done by [Cabildo],
[Benguet Corporation] shall pay [Cabildo] at the rate herein provided, as follows:

(a) Painting

Steel & Concretes

Wood

1st coat

P2.90/sq. m.

P2.50/sq. m.

2nd coat

2.50/sq. m.

2.10/sq. m.

(b) Scrapping and Cleaning

P1.85/sq. m.
 (c) Scaffolding

P0.50/sq. m.

(d) De-zincing

P1.25/sq. m.

(e) Dismantling of sidings & ceilings

P2.50/sq. m.

(f) Installation of sidings & ceilings

P5.50/sq. m.

(g) Handling of Lumber & installation

P275.00/cu. m.

(3) [Cabildo] shall employ his own workers and employees, and shall
have the sole and exclusive obligation to pay their basic wage, overtime pay, ECOLA,
medical treatment, SSS premiums, and other benefits due them under existing
Philippine laws or other Philippine laws which might be enacted or promulgated
during the life of this Contract. If, for any reason, BENGUET CORPORATION is
made to assume any liability of [Cabildo] on any of his workers and employees,
[Cabildo] shall reimburse [Benguet Corporation] for any such payment.
 (4) [Cabildo] shall require all persons before hiring them in the work
subject of this Contract to obtain their clearance from the Security Department of
Baguio District Gold Operations of BENGUET CORPORATION.

(5) BENGUET CORPORATION shall retain 10% of every performance

payment to [Cabildo] under the terms and conditions of this Contract. Such retention
shall be cumulative and shall be paid to [Cabildo] only after thirty (30) days from the
time BENGUET CORPORATION finally accepts the works as fully and completely
finished in accord with the requirements of [Benguet Corporation]. Before the 10%
retention of performance payments will, however, be fully paid to [Cabildo], all his
workers and employees shall certify under oath that they have been fully paid their
wages, SSS, medicare, and ECC premiums, ECOLA, overtime pay, and other benefits
due them under laws in force and effect and that they have no outstanding claim
against [Cabildo]. BENGUET CORPORATION has the right to withhold from the
10% retention any amount equal to the unsatisfied claim of any worker against
[Cabildo] until the claim of the worker is finally settled.

(6) [Cabildo] shall not be allowed to assign or subcontract the works, or

any phase thereof, and any violation of this provision will entitle BENGUET
CORPORATION the sole and exclusive right to declare this Contract as cancelled and
without any further force and effect.

(7) [Cabildo] and his heirs shall be solely and directly liable – to the
exclusion of BENGUET CORPORATION, its stockholders, officers, employees, and
agents and representatives – for civil damages for any injury or death of any of his
employees, workers, officers, agents and representatives or to any third person and for
any damage to any property due to faulty or poor workmanship or negligence or
willful act of [Cabildo], his workers, employees, or representatives in the course of,
during or when in any way connected with, the works and construction. If for any
reason BENGUET CORPORATION is made to assume any liability of [Cabildo], his
workers, employees, or representatives in the course of, during or when in any way
connected with, the works and construction. If for any reason BENGUET
CORPORATION is made to assume any liability of [Cabildo], his workers,
employees, or agents or representatives under this provision, [Cabildo] and his heirs
shall reimburse the CORPORATION for any payment.

(8) [Cabildo] hereby undertakes to complete the work subject of this

Contract within (no period fixed) excluding Sundays and Holidays, otherwise,
[Benguet Corporation] shall have the sole and exclusive right to cancel this Contract.
 IN WITNESS WHEREOF, the parties have hereunto affixed their signatures
on this 23rd day of March, 1983 at Itogon, Benguet Province.

BENGUET CORPORATION

By:

(sgd.)

DENNIS R. BELMONTE

Vice-President

Benguet Gold Operations

(sgd.)

CESAR Q. CABILDO

Contractor

SIGNED IN OUR PRESENCE:

_____sgd.______ Witnesses _____sgd.______[7]

Apart from the price schedule stipulated in the Contract of Work, which only
reproduced the quotation and bid submitted by Cabildo, and the preliminary
discussions undertaken by the parties, all the stipulations were incorporated therein by
Benguet Corporation which solely drafted the contract.

To undertake the project, Cabildo recruited and hired laborers – thirty-three (33)
painters and carpenters – including petitioner Velasco as his general foreman.
The succeeding events, narrated by the trial court as echoed by the appellate court in
their respective decisions, led to the parties’ falling out:

[I]t must be pointed out that the Mill Buildings in Balatoc were about 28 buildings in
all interconnected with each other grouped into 9 areas with some buildings very
dangerous since it housed the machineries, agitators and tanks with cyanide solutions
to mill the ores while the bunkhouses, which housed the laborers, were about 38
buildings in all averaging about 30 to 35 meters in height or more than 100 feet and
thus would take sometime to paint and repair probably for about one and a half (1½)
years.

Thus, the need for scaffoldings to paint the Mill buildings and bunkhouses so
that the workers would be safe, can reach the height of the buildings and avoid the
fumes of cyanide and other chemicals used in the Milling of the ores.

Payment was to be made on the basis of work accomplished at a certain rate

per square meter in accordance with the prices indicated in the Contract. The
procedure followed was that [Cabildo] requested the office of Reyes for
measurement; then Reyes assign[s] an employee to do the measurement; the
employee was accompanied by [Cabildo] or his authorized representative for the
measurement; upon completion of the measurement, the computations were submitted
to Engr. Manuel Flores, the Supervisor assigned to the work area; if Engr. Flores
approved the computation, it was then recommended to Reyes for liquidation; and
Reyes thereafter issued the Liquidation Memo to schedule payment of work
accomplished.

[Cabildo] was represented in the measurement by either his foreman or his son
while Mr. Licuben was assigned to do the measurement for the company.

xxxx

On May 30, 1983, Velasco left [Cabildo] as the latter’s general foreman and
went on his own as contractor, offering his services for painting jobs.
 On June 6, 1983, Velasco entered into a Contract of Work with [Benguet
Corporation], represented by Godofredo Fider, to paint the Breakham bridge at
Antamok Mine, Barangay, Loakan, Itogon Benguet for the sum of P2,035.00.

x x x Apparently, the above contract of work of Velasco is in Antamok while

the Contract of Work of [Cabildo] is in Balatoc.

On June 9, 1983 (6/9/83), Reyes recommended approval of the Quotation of

Velasco for the painting of the inner mill compound of Balatoc for Areas 2, 3, 5, 6 & 7
and approved by Fider on June 13, 1983 at a lower price schedule per sq. meter than
that of [Cabildo].

Hence, on June 13, 1983, Rolando Velasco entered into another Contract of
Work with [Benguet Corporation], represented by Godofredo Fider, to paint the
underneath of Mill Buildings No. 702 at Balatoc Mill, Barangay Virac, Itogon,
Benguet and install the necessary scaffoldings for the work for the sum of P5,566.60.

On the same date of June 13, 1983, Velasco entered into another Contract of
Work with [Benguet Corporation], represented by Godofredo Fider, to scrape, clean
and paint the structural steel members at the Mill crushing plant at Balatoc Mill,
Barangay Virac, Itogon, Benguet and install the necessary scaffoldings for the
purpose for the consideration of P8,866.00.

xxxx

[Cabildo] complained and protested but Reyes said the Contract of Work of
[Cabildo] covers only the painting of exterior of the Mill Buildings in Balatoc but not
the interior although the same was not expressly stated in the Contract. This caused
the souring of relationship of [Cabildo] and [petitioners] because at that time
[Cabildo] had already painted the top roof and three (3) sidings both interior and
exterior of Mill Building 702.[8]

Because of these developments, Cabildo enlisted the services of Atty. Galo Reyes,
who wrote both Fider and Jaime Ongpin, President of Benguet Corporation, regarding
the ostensibly overlapping contracts of Cabildo and Velasco.

Parenthetically, at some point in June 1983, Cabildo was allowed to paint the
interiors of various parts of the Mill Buildings, specifically, the Mill and Security
Office, Electrical Office, Baldemor Office, and Sala Shift Boss.

On June 30, 1983, Cabildo was prevented from continuing work on the job site,
as Fider and Reyes were supposedly investigating Cabildo’s participation in the
incident where a galvanized iron sheet fell on one of the agitator tanks. For three (3)
months, Cabildo was not allowed to perform work stipulated in the agreement and
complete painting of the Mill Buildings and Bunkhouses at Balatoc. He was only
allowed to do repairs for previously accomplished work. Further, Benguet
Corporation continued to withhold payment of Cabildo’s last work accomplishment
for the period from June 16 to 30, 1983.

On July 2, 1983, Benguet Corporation’s Group Manager for Legal and

Personnel, Atty. Juanito Mercado, who prepared and notarized the Contract of Work,
responded to Cabildo’s counsel, declaring that Benguet Corporation’s Contract of
Work with Cabildo only covered exterior painting of the Mill Buildings and
Bunkhouses, whereas the contract with Velasco covered interior painting of the Mill
Buildings, steel structures and underneath the GI Roofing.

Eventually, upon his visit to Benguet Corporation accompanied by counsel, Cabildo

was paid for the June 16 to 30, 1983 work accomplishment. In this regard, petitioner
Reyes issued Liquidation Memo dated July 25, 1983 which, curiously, had an
intercalation that payment made was for the exterior painting of the Mill Buildings in
Balatoc.

As regards the repairs of defects and leaks of previous work accomplishments, which
were the only job Cabildo was allowed to work on, these were repaired satisfactorily
and Cabildo was paid the previously withheld amount of P19,775.00.

Once again, in August of the same year, Cabildo wrote petitioner Belmonte
appealing his preclusion from continuing the Contract of Work and the overlapping
contracting jobs continuously given to Velasco. Yet, Cabildo was still disallowed to
perform the job under the Contract of Work for the month of September up to
December 1983.
 With respect to the Bunkhouses, the petitioners did not require Cabildo to paint
them. Neither did petitioners provide the materials needed therefor. The petitioners
simply claimed that Cabildo was not at all allowed to perform work on the
Bunkhouses due to the rainy season and because of the financial difficulties Benguet
Corporation was then experiencing.

Thus, Cabildo filed a complaint for damages against the petitioners and Velasco
before the RTC, claiming breach by Benguet Corporation of their Contract of Work.
Further, Cabildo sought damages for the petitioner’s harassment and molestation to
thwart him from performing the job under the Contract of Work. Lastly, Cabildo
prayed for damages covering lack of payments and/or underpayments for various
work accomplishments.

The RTC rendered a decision in favor of Cabildo and found the petitioners, as
well as Velasco, defendant before the RTC, jointly and severally liable to Cabildo for:
(1) P27,332.60 as actual damages; (2) P300,000.00 as indemnification for unrealized
profit; (3) P100,000.00 as moral damages; (4) P50,000.00 as exemplary damages; (5)
P30,000.00 as attorney’s fees; and (5) costs of suit.

On appeal, the CA affirmed with modification the RTC’s ruling. The appellate
court excluded Velasco from liability for the foregoing damages.

Hence, this appeal by the petitioners positing the following issues:

WHETHER [OR NOT] THERE IS BREACH OF CONTRACT AS BASIS FOR

AWARD OF DAMAGES AND ATTORNEY’S FEES[?]

WHETHER [OR NOT] THE COUNTERCLAIM OF PETITIONERS SHOULD BE

GRANTED[?][9]

We deny the petition. We see no need to disturb the findings of the trial and appellate
courts on the petitioners’ liability for breach of the subject Contract of Work.

It is a well-entrenched doctrine that factual findings of the trial court, especially when
affirmed by the appellate court, are accorded the highest degree of respect and are
conclusive between the parties and even on this Court.[10] Nonetheless, jurisprudence
recognizes highly meritorious exceptions, such as: (1) when the findings of a trial
court are grounded entirely on speculations, surmises or conjectures; (2) when a lower
court’s inference from its factual findings is manifestly mistaken, absurd or
impossible; (3) when there is grave abuse of discretion in the appreciation of facts; (4)
when the findings of the appellate court go beyond the issues of the case or fail to
notice certain relevant facts which, if properly considered, will justify a different
conclusion; (5) when there is a misappreciation of facts; and (6) when the findings of
fact are conclusions without mention of the specific evidence on which they are
based, are premised on the absence of evidence, or are contradicted by evidence on
record.[11] It is noteworthy that none of these exceptions which would warrant a
reversal of the assailed decision obtains herein.

The petitioners insist that the CA erred in awarding Cabildo damages because his
Contract of Work with Benguet Corporation only covered painting of the exterior of
the Mill Buildings and Bunkhouses at the Balatoc mining site. In effect, petitioners
claim that their respective contracts with Cabildo and Velasco cover separate and
different subject matters, i.e., painting of the exterior and interior of the Mill
Buildings, respectively.

We cannot agree with the petitioners’ obviously strained reasoning. The Contract of
Work with Cabildo did not distinguish between the exterior and interior painting of
the Mill Buildings. It simply stated that Cabildo “shall paint the Mill Buildings at
Balatoc Mill and all the Bunkhouses at Balatoc, Itogon, Benguet.” There is nothing in
the contract which will serve as a basis for the petitioners’ insistence that Cabildo’s
scope of work was merely confined to the painting of the exterior part of the Mill
Buildings.

To bolster their position, the petitioners contend that there is an apparent conflict
between the wording of the contract and the actual intention of the parties on the
specific object of the painting job. The petitioners argue that Cabildo knew of
Benguet Corporation’s practice to have only the exterior of buildings painted and was,
therefore, aware that the Contract of Work referred only to the exterior painting of the
Mill Buildings, excluding the interior portion thereof. Thus, the petitioners submit
that when there is a conflict as regards the interpretation of a contract, the obvious
intention of the parties must prevail.
We reject the petitioners’ flawed contention. Apart from the petitioners’ self-serving
assertion, nothing in the record points to the parties’ intention different from that
reflected in the Contract of Work. To the contrary, the records reveal an unequivocal
intention to have both the exterior and interior of the Mill Buildings painted.

Article 1370 of the Civil Code sets forth the first rule in the interpretation of
contracts. The article reads:

Art. 1370. If the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulations shall control.

If the words appear to be contrary to the evident intention of the parties, the
latter shall prevail over the former.

In the recent case of Abad v. Goldloop Properties, Inc.,[12] we explained, thus:

The cardinal rule in the interpretation of contracts is embodied in the first

paragraph of Article 1370 of the Civil Code: “[i]f the terms of a contract are clear and
leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulations shall control.” This provision is akin to the “plain meaning rule” applied
by Pennsylvania courts, which assumes that the intent of the parties to an instrument
is “embodied in the writing itself, and when the words are clear and unambiguous the
intent is to be discovered only from the express language of the agreement.” It also
resembles the “four corners” rule, a principle which allows courts in some cases to
search beneath the semantic surface for clues to meaning. A court’s purpose in
examining a contract is to interpret the intent of the contracting parties, as objectively
manifested by them. The process of interpreting a contract requires the court to make
a preliminary inquiry as to whether the contract before it is ambiguous. A contract
provision is ambiguous if it is susceptible of two reasonable alternative
interpretations. Where the written terms of the contract are not ambiguous and can
only be read one way, the court will interpret the contract as a matter of law. If the
contract is determined to be ambiguous, then the interpretation of the contract is left
to the court, to resolve the ambiguity in the light of the intrinsic evidence.

In our jurisdiction, the rule is thoroughly discussed in Bautista v. Court of

Appeals:

The rule is that where the language of a contract is plain and unambiguous, its
meaning should be determined without reference to extrinsic facts or aids. The
intention of the parties must be gathered from that language, and from that language
alone. Stated differently, where the language of a written contract is clear and
unambiguous, the contract must be taken to mean that which, on its face, it purports to
mean, unless some good reason can be assigned to show that the words should be
understood in a different sense. Courts cannot make for the parties better or more
equitable agreements than they themselves have been satisfied to make, or rewrite
contracts because they operate harshly or inequitably as to one of the parties, or alter
them for the benefit of one party and to the detriment of the other, or by construction,
relieve one of the parties from the terms which he voluntarily consented to, or impose
on him those which he did not.

In the case at bench, the Contract of Work leaves no room for equivocation or
interpretation as to the exact intention of the parties. We also note that Benguet
Corporation’s counsel drafted and prepared the contract. Undoubtedly, the petitioners’
claimed ambiguity in the wordings of the contract, if such an ambiguity truly exists,
cannot give rise to an interpretation favorable to Benguet Corporation. Article 1377 of
the Civil Code provides:

Art. 1377. The interpretation of obscure words or stipulations in a contract

shall not favor the party who caused the obscurity.

Still, the petitioners insist that the parties’ intention was different, and that Cabildo
knew of, and acquiesced to, the actual agreement.

We remain unconvinced. Even if we were to patronize the petitioners’ stretched logic,

the supposed intention of the parties is not borne out by the records. Article 1371 of
the same code states:

Art. 1371. In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered.
In stark contrast to the petitioners’ assertions are the following:

First, the procedure for work accomplishments and payments followed by the parties
required representatives and/or employees of Benguet Corporation to closely monitor
Cabildo’s performance of the job. Notably, when Cabildo painted both the exterior
and interior of the Mill Buildings except for the interior of the refinery buildings
where gold is being minted, he was under the close supervision of petitioners Reyes
and Fider. If, as the petitioners claim, the intention was only to paint the exterior of
the Mill Buildings, then Reyes and Fider, or any of Benguet Corporation’s
representatives assigned to monitor the work of Cabildo, should have, posthaste,
stopped Cabildo from continuing the painting of the interiors.

Moreover, the materials for the painting work were provided by Benguet Corporation
as listed and requested by Cabildo. The petitioners had the opportunity to disapprove
Cabildo’s requests for materials needed to paint the interiors of the Mill Buildings, but
they failed to do so.

Second, although Cabildo concedes that he knew of Benguet Corporation’s practice to

have only the exteriors of buildings painted, he refutes the petitioners’ claim that the
aforesaid practice extended to the painting of the Mill Buildings. Cabildo asseverates
that the practice of painting only the exterior of buildings was confined to the
Bunkhouses. Evidently, Cabildo’s knowledge of the claimed practice, as qualified by
Cabildo himself, does not translate to an inference that the parties had intended
something other than what is written in the Contract of Work.

Lastly, a singular document, the Liquidation Memo dated July 25, 1983 issued by
petitioner Reyes, further highlights the petitioners’ lame attempt to paint an intention
different from the specific language used in the Contract of Work. This belated
qualification in the Liquidation Memo stating that payment was being made for the
exterior painting of the Mill Buildings speaks volumes of the parties’ actual intention
captured in the Contract of Work, as none of the Liquidation Memos issued by the
petitioners for Cabildo’s previous work accomplishments qualified the painting
performed by Cabildo on the Mill Buildings.

From the foregoing, it is crystal clear that the petitioners breached the Contract of
Work with Cabildo by awarding Velasco a contract covering the same subject matter,
quite understandably, because Velasco offered a price schedule lower than Cabildo’s.
We completely agree with the uniform findings of the lower courts that the petitioners
waylaid Cabildo and prevented him from performing his obligation under the
Contract of Work.

With respect to the painting of the Bunkhouses, the petitioners claim that Cabildo was
not allowed to paint them due to the rainy season and because of the financial
difficulties of Benguet Corporation. Suffice it to state that the Contract of Work did
not provide for a suspension clause. Thus, Benguet Corporation cannot unilaterally
suspend the Contract of Work for reasons not stated therein.

Consequent to all these disquisitions, we likewise affirm the lower courts’ dismissal
of the petitioners’ counterclaim.

WHEREFORE, premises considered, the petition is hereby DISMISSED. The Court

of Appeals decision in CA-G.R. CV No. 37123 is AFFIRMED. Costs against the
petitioners.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice

Chairperson

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

MINITA V. CHICO-NAZARIO

Associate Justice

RUBEN T. REYES

Associate Justice

ATT E STAT I O N

I attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGO

Associate Justice
 Chairperson, Third Division

C E RT I F I CAT I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the opinion
of the Court’s Division.

REYNATO S. PUNO

Chief Justice

[1] Penned by Associate Justice Marina L. Buzon, with Associate Justices

Eubulo G. Verzola and Bienvenido L. Reyes, concurring; rollo, pp. 82-100.

[2] Penned by Judge Ruben C. Ayson, id. at 49-80.

[3] Vice-President and General Manager of Benguet Gold Operations of

Benguet Corporation at the time material to the complaint before the RTC.

[4] Department Manager of the Construction Department.

[5] Division Manager of Technical Services.

[6] The petitioners, collectively.

[7] Annex “A,” records, pp. 6-9.

[8] Rollo, pp. 84-87.

[9] Petitioners’ Memorandum, p. 5; rollo, p. 194.

[10] Philippine Health-care Providers, Inc. v. Estrada, G.R. No. 171052,
January 28, 2008, 542 SCRA 616, 621.

[11] Id.

[12] G.R. No. 168108, April 13, 2007, 521 SCRA 131, 143.